XLU has a dividend yield of 4.2%, according to manager State Street Global Advisors. SPDR Barclays Intermediate Term Corporate Bond ETF (NYSEArca: ITR) is yielding 3.2%.
“Furthermore, utilities offer inflation protection,” according to ETF Base. “While higher inflation rates leads to lower utility company valuations, utilities are paid based on how much capital they deploy in regulated markets. Therefore, inflation in the cost to build new power plants means more capital at work and more capital earning a guaranteed return for regulated utility investors.”
Other ETFs for the sector include Vanguard Utilities ETF (NYSEArca: VPU) and iShares Dow Jones US Utilities (NYSEArca: IDU).
Utilities Select Sector SPDR
Full disclosure: Tom Lydon’s clients own SPY.